Home prices rose in June for the third consecutive month Ã¢â‚¬" a precipitate of the homebuyer tax credit that sparked a flurry of purchase activity during the spring months and helped to prop up home values.
Buyer demand, though, has now dropped off substantially, as evidenced by the sharp decline in home sales during July. It's a trend that is expected to continue for several more months and will likely rob the market of the recent rebound in home prices.
Data released by Standard & Poor's Tuesday shows that home prices nationally rose 1.0 percent in June compared to May. The 10-city composite of the S&P/Case-Shiller Home Price Indices was up 5 percent from June 2009, while the 20-city composite posted a 4.2 percent annual gain. June itself was positive, but annual growth rates decelerated in 14 of the metro areas included in S&P's study.
Looking at the quarterly figures, S&P reported that its national price index rose 4.4 percent in Q2 2010, after having fallen 2.8 percent in the first quarter. Nationally,
home prices were 3.6 percent above their year-earlier levels at the end of the second quarter.
From the home price trough in April 2009 through June 2010, S&PÃ¢â‚¬â„¢s 10-city composite has recovered by 7.0 percent, and the 20-city composite is up 6.3 percent. Home prices nationally have grown by 6.8 percent since the 2009 low, but are still more than 28 percent below the home price peak of June/July 2006.
Seventeen of the 20 metro areas studied by S&P showed an increase in June home prices compared to May Ã¢â‚¬" Las Vegas was down 0.6 percent, while Phoenix and Seattle were both flat.
S&P says Las Vegas continues to be the weakest market. It was the only one in the report that fell in two months of the second quarter. Home prices in that city are very close to their January 2000 levels.
Month-over-month gains were greatest in Minneapolis, Detroit, and Chicago, all of which posted a 2.5 percent increase.
Housing prices have rebounded from crisis lows, but S&P says other recent housing indicators point to more ominous signals as tax incentives have ended and foreclosures continue.
David M. Blitzer, chairman of the index committee at Standard & Poor's, notes that July data on both home sales and starts were Ã¢â‚¬Å“very, very weak.Ã¢â‚¬Â
Ã¢â‚¬Å“The inventory of unsold homes and monthsÃ¢â‚¬â„¢ supply data were particularly troubling,Ã¢â‚¬Â Blitzer said. Ã¢â‚¬Å“If this relative weakness in demand continues, it will likely filter through to home prices in coming months.Ã¢â‚¬Â